The growth and development of the shale oil and natural gas industries could positively impact many economies around the world. The potential oil and natural gas production levels estimated around the world from shale formations would usher in a new age marked by economic growth not experienced before in our lifetimes. As the country with the largest known shale deposits in the world, the United States would be ideally positioned to reap the most benefit from this new age, which is why we have dubbed it The New American Century.
Shale formations are found in countries all around the world, but the largest can be found in the United States. The Green River Formation, located in the western United States, is the most prevalent known shale oil field in the world, and is conservatively estimated to contain 800 billion barrels of recoverable oil. Other formations that rank among the worlds largest, such as the Bakken, Utica, Marcellus, and the Monterey formation just to name a few1, also are located within the continental United States. Until recently, these vast unconventional oil deposits could not be accessed due to technological obstacles. Fortunately, breakthroughs in mining and drilling technology, such as horizontal drilling and hydraulic fracturing, have enable us to access not only mature shale formations, but immature shale formations as well.
We believe that a domestic energy revolution would signal the beginning of The New American Century. This revolution will be such that the United States could be freed from its dependence on middle eastern oil in as little as three years. In addition, the world would experience a global energy rebalance with the result of the world’s supply of oil no longer being concentrated primarily in the Middle East. This is beneficial to the global economy due to the long history of instability throughout that region of the world. Every time instability or civil unrest wracks the Middle East, even in countries that are not major producers of oil like Libya, the global economy suffers due to rising costs in crude oil markets. A redistribution of control over the world’s energy supply would reduce the effect that instability in the Middle East has on the global economy, as well as reducing the amount of capital available that could potentially be used to fund terrorism.
This redistribution of the production of oil and natural gas would result in an economic surge for the United States. Conservative estimates on the effect of a vibrant shale oil industry are staggering. Experts state that the development of a shale oil industry producing 3 million barrels of oil a day could generate additional annual profits of around $20 billion. The U.S. could also benefit from the creation of a few hundred thousand additional jobs, and a savings to consumers and companies of about $15-$20 billion each year1.
In addition to the direct effects of a lucrative shale oil industry, the U.S. could also benefit from a more robust financial sector. The introduction of vast sums of unconventional oil on the global market could drastically lower the price of that commodity worldwide1. This could translate into increased stock performance caused by the savings in operating costs for domestic companies. Those savings could lead to additional profits and, ultimately, higher stock prices on the financial markets due to the widespread use of fossil fuels in almost every aspect of the U.S. economy.
Savings in expenditures on fuel are not the only way that U.S. companies would benefit from energy independence. The United States consumes over 7 billion barrels of oil each year. With oil currently trading around $110 per barrel (April, 2011) on the international market, that consumption level translates into an annual national expense of nearly $800 billion, over half of which is sent overseas to large oil producing countries like Saudi Arabia. If the United States were to attain energy independence, roughly $500 billion additional dollars would be re-introduced into our domestic economy every single year. An increase in capital of that magnitude in our domestic markets could act as a catalyst that propels several key segments of American industry that we have identified to new heights due to consumers and investors being more active in the marketplace with their new found resources and employment opportunities.
Tapping into the vast unconventional oil resources around the world would trigger a global economic shift. The implications of a domestically based oil shale industry in the U.S. are staggering. As the largest consumer of fossil fuels, and as the country that houses the largest shale oil reserves in the world, the U.S. would be the major benefactor of this new age of energy production. As global demand for petroleum and natural gas continue to rise, along with the price of oil, the pressure to develop alternative energy sources is growing faster than ever. This potential new age of energy independence is just around the corner; welcome to The New American Century.
References:
1. Oil Shale Development in the United States: Prospects and Policy Issues. RAND Corporation. 2005. Web. 14 March 2011.
2. Denning, Dan. Oil Shale Reserves. ADaily Reckoning. Web. 14 March 2011.
3. Davis, Philip. The Global Oil Scam: 50 Times Bigger Than Madoff. Seeking Alpha. Web. 14 March 2011.